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When a ‘group instruction’ becomes a transfer pricing and directors’ liability problem
A recent Czech Supreme Administrative Court decision (3 Afs 165/2024‑67) is a timely reminder that transfer pricing is not only about invoices and formal agreements. For tax purposes, economic reality prevails: if a Czech subsidiary absorbs costs or risks arising from a parent company’s strategic decision without arm’s‑length compensation (or other adequate consideration), the tax authorities may deem it a controlled transaction and adjust the tax base. This remains true even if the strategic instruction is wholly informal or unwritten. There is also a second, often underestimated, layer not explicitly addressed in the judgment: the legal obligations of local management under Czech law. And although this may
Starting the new year with a successfully completed deal – Kinstellar advises E.ON on the sale of its Czech gas distribution business to CEZ Group
Kinstellar has successfully advised E.ON on the sale of 100% of the shares in Gas Distribution, the operator of the gas distribution network in the South Bohemian Region and parts of the Vysočina Region in the Czech Republic. The buyer, CEZ Group, has completed the acquisition through its subsidiary GasNet, thereby significantly expanding its gas distribution footprint across the country. Kinstellar's engagement spanned the full lifecycle of the transaction, including the preceding corporate reorganisation of E.ON's Czech operations involving a simultaneous spin-off and hive-down of its electricity and gas distribution businesses, regulatory approvals, advice relating to vendors’ due diligence, preparation and running
Alternative distribution models in the automotive sector: Consumer protections and liabilities
Alternative distribution models based on direct sales to consumers can be carried out with the varied involvement of traditional dealers. This means, among other things, producers taking on a significant number of consumer law obligations previously borne by dealers. In any event, the actual liability of producers in relation to direct sales depends on the respective contractual terms between manufacturers and agents. For example, in Austria, the differing contractual terms between a producer and agent, and an agent and customer, can lead to the following scenarios: a) a commercial agent selling vehicles in the name of the manufacturer while the manufacturer as the seller remains fully liable in terms of contractual
Alternative distribution models in the automotive sector: Contractual law issues
The European automotive industry is in the midst of a profound transformation. Traditional dealership networks are being redefined, with manufacturers increasingly weighing direct-to-consumer, agency, or hybrid sales models. While such innovations can enhance brand control and customer engagement on the part of manufacturers, they also raise complex contractual law issues related to commercial and legal sustainability. At the centre of these challenges is the reality that altering hitherto existing distribution models requires substantial changes to existing contractual relationships. After all, most dealership agreements contain detailed provisions on exclusivity, termination rights, and non-compete obligations. Failure
Transitioning to an agency model in automotive sales: The pros and cons from a legal perspective
The automotive industry is entering a new era – not only in terms of technology and electromobility but also in terms of how vehicles are sold. Certain manufacturers are shifting away from the traditional dealership model towards alternative sales models, such as agency system, while many others remain wary about the viability of such alternatives. Traditionally, manufacturers would sell cars through dealerships, who acted both as buyers and as agents. Dealers would typically purchase vehicles, hold inventory, and then sell cars to customers, earning profits from sales margins and commissions. Under the new agency model, dealers will act as sales agents directly for manufacturers. They will thus no longer purchase
Kinstellar advises E.ON on the sale of its Czech gas distribution business to GasNet
Kinstellar acted as legal counsel to E.ON in connection with the sale of its wholly owned subsidiary, Gas Distribution, to GasNet. The transaction, which is among the largest signed in the Czech Republic this year, involves gas distribution business in South Bohemia and parts of the Vysočina Region. Completion remains subject to customary regulatory approvals. Kinstellar's engagement spanned the full lifecycle of the transaction, including the preceding corporate reorganisation of E.ON's Czech operations involving a simultaneous spin-off and hive-down of its electricity and gas distribution businesses, advice relating to vendors’ due diligence, preparation and running of the auction process and negotiation of the
Kinstellar advises on the combination of KTP Kunststoff Palettentechnik and conTeyor Group
Kinstellar has successfully advised on the Czech law aspects of the combination of the businesses of Germany-based KTP Kunststoff Palettentechnik, a portfolio company of VR Equitypartner, and Belgium-based conTeyor International, majority-owned by Gilde Equity Management. The transaction creates a leading group in the sustainable packaging sector, combining KTP's foldable container expertise with conTeyor's textile inner packaging solutions. The newly formed group is expected to generate sales of approximately EUR 200 million annually and employ around 1,000 people. The Kinstellar team in Prague was led by Karla Rundtová (Partner) and included Adam Němec (Managing Associate) and Tereza Holubová (Senior Associate)
Get ready for the new foreign direct investment screening regime in Bulgaria
A foreign direct investment screening mechanism entered into force in Bulgaria on 12 March 2024. The mechanism applies Regulation (EU) 2019/452, establishing a framework for the screening of foreign direct investment (“FDI“) into the Union. This is a significant development in the regulatory landscape governing foreign investments in Bulgaria, although some uncertainty remains as to its impact. Due to certain lack of clarity in the final text of the legislation, each investment should be carefully analysed on a case-by-case basis, especially during the transition period. Investments requiring an FDI approval According to the bill amending the Investment Promotion Act (“IPA”), an investment in Bulgaria is
Transposition of the CSRD in the Czech Republic
Directive (EU) 2022/2464 on corporate sustainability reporting (the “CSRD”) was adopted at the end of 2022 and entered into force in January 2023, with a transposition deadline of 6 July 2024. The Czech Republic has opted for a phased-in transposition process in two stages corresponding to the implementation timeframe under the CSRD: This first phase, carried out as a minimum transposition, is already underway, namely in the context of the draft legislation on the consolidation of public budgets (the “Consolidation Package”). The Consolidation Package, among other legislative measures, introduces legislative provisions on sustainability reporting, to the extent corresponding to the first phase of reporting
Kinstellar successfully advises on exit from Arkady Pankrac joint venture
Kinstellar is pleased to announce the successful completion of its advisory role in facilitating the exit of KG CURA Vermögensverwaltung G.m.b.H. & Co. from a joint venture with G City Europe (formerly Atrium European Real Estate). The joint venture pertained to the ownership of Arkady Pankrac, a premium shopping centre with a focus on fashion, located in one of Prague's most prominent business and residential districts.The core team consisted of Partner Karla Rundtová and Managing Associate Adam Němec, with an essential support from Junior Associate Paul Válka.
Kinstellar launches comprehensive FDI screening service to help clients navigate the regulatory landscape
Kinstellar is delighted to announce the launch of its comprehensive Foreign Direct Investment (FDI) screening service. As the regulatory landscape around FDI continues to evolve, Kinstellar recognises the critical importance of helping clients navigate this complex area. Our team of cross-practice experts has deep understanding of the various regulatory frameworks governing FDI screening across different jurisdictions. We help our clients assess the potential risks and opportunities associated with foreign investment and develop strategies to ensure compliance with applicable laws and regulations. The new service includes comprehensive FDI screening and due diligence; assistance with FDI screening filings and communicating
Kinstellar advises Crédit Agricole Consumer Finance and Stellantis on the acquisition of LeasePlan’s operations in the Czech Republic
Kinstellar, in collaboration with Linklaters, has successfully advised Crédit Agricole Consumer Finance and Stellantis on their acquisition of the Czech operations of LeasePlan from ALD Automotive. The deal follows ALD's announcement in January 2022 of its intention to acquire 100% of LeasePlan. Kinstellar successfully advised on the Czech aspects of the transaction. This strategic acquisition includes ALD's operations in Ireland, Norway, and Portugal, as well as LeasePlan's business activities in the Czech Republic, Finland, and Luxembourg. It marks a significant step forward in Crédit Agricole Consumer Finance and Stellantis' pursuit of growth in the mobility and long-term vehicle leasing sectors. The disposals align